Compromiso institucional, el Plan Verde

Set out below is a summary of the general regulatory and principal ongoing supervision requirements for AIFs.

10.6.1 Financial Resources/Capital

A QIAIF investment company must have sufficient financial resources at its disposal to enable it to conduct its business effectively and meet its liabilities.

Although capital requirements are generally seen as being imposed only on the AIFM itself, it is important to bear in mind that a self-managed investment company may be considered to be an internally managed AIFM and as such will be subject to a EUR 300,000 initial capital requirement. In addition, an internally managed AIF is required to have either additional own funds appropriate to cover potential liability risk arising from professional negligence or have appropriate professional indemnity insurance coverage.

Where an investment company type QIAIF does not employ the services of a management company or an authorised AIFM, the investment company must have a minimum paid up share capital equivalent to EUR 125,000 within three months of authorisation and must satisfy the Central Bank on a continuing basis that it has sufficient management resources to effectively conduct its business and otherwise comply with Central Bank imposed provisions regarding AIF management companies as contained in the AIF Rulebook.

10.6.2 Prospectus

A QIAIF must publish a prospectus which must be dated and the essential elements of which must be kept up to date. The prospectus must contain sufficient information to enable investors to make an informed judgement of the proposed investment.

The minimum content requirements of the prospectus to be issued by a QIAIF are set out in the AIF Rulebook and include requirements to disclose specific information in relation to the QIAIF itself (name, form in law, registered/head office, date of establishment / incorporation and limited duration, if any). The prospectus must also disclose where the constitutional document and annual reports may be obtained; must provide a brief indication as to the tax system applicable to the QIAIF including as to whether deductions are made at source from income and capital gains paid to investors; accounting dates and distribution frequency; and a description of the rules for determining and applying income. The prospectus must also include specific details regarding the directors and their experience, must identify the persons who accept responsibility for information contained in the prospectus and must disclose the material provisions of material contracts with third parties types. It should also outline the main characteristics of the units/shares and, in the case of an investment company, disclose its authorised share capital. Descriptions of fees and charges and other applicable expenses, directly or indirectly borne by the investors should be disclosed as well as a description of the AIFM’s remuneration policies and practices.

Additional disclosures are required for particular types of funds, including, for example, where a QIAIF issues partly-paid units/shares; where, if applicable, units or shares are listed or dealt in; capacity for cross-investment between sub-funds of an umbrella; as well other specific disclosures regarding investments in other funds. Disclosures regarding redemption facilities where a QIAIF is open-ended with limited liquidity; the rules applicable to in-kind redemptions; dealing procedures generally; as well as information regarding certain of the

Dillon Eustace | 150 service providers (management company, general partner, investment manager and other service providers) are also required.

It is also required to have a specific authorisation legend, to disclose potential conflicts of interest (including any directed brokerage programmes, receipt of commissions by virtue of investing in other funds, soft commission arrangements), the potential for related party transactions, to disclose segregated liability between sub-fund provisions (for umbrella investment companies) and also any warehousing proposals and any capacity to invest through subsidiaries.

The prospectus must also comply with the AIFM’s disclosure to investors obligations by including the information which AIFMs are required to make available to investors before they invest, as summarised in Section 6.2 (of this Guide).

The prospectus must be offered free of charge to prospective investors before a contract for the acquisition of shares/units is entered into and if the prospectus is translated into a language other than English, it can only contain the same information and with the same meaning as in the version submitted to the Central Bank.

The AIF Rulebook contains express requirements that the QIAIF comply with the terms of its prospectus and that details of any derogations granted to the QIAIF by the Central Bank are included within the prospectus.

10.6.3 Umbrella QIAIFs

If the QIAIF is an umbrella type investment company, the prospectus must state that it is “An umbrella fund with segregated liability between sub-funds”.

Where an umbrella type QIAIF issues sub-fund specific supplements to its prospectus, the supplement must disclose that it is an umbrella and either name the other sub-funds or state that their names will be available upon request. The prospectus must also disclose the extent to which, and the conditions applicable to, investment can be made by one sub-fund in another and must also disclose switching charges if any.

10.6.4 Change in name of QIAIF

Prior Central Bank approval is required for a change in the name of a QIAIF. 10.6.5 Changes to QIAIF documentation

Prior notification to the Central Bank is required for changes to a QIAIF’s documentation including its prospectus, constitutional document and material contracts. If the Central Bank

objects to a change, the change may not be made.

10.6.6 Changes to objectives/material changes to investment policies

A change to the investment objectives, or a material change to the investment policies of a QIAIF, as disclosed in the prospectus, may not be effected without the prior written approval of all investors or approval on the basis of a majority of votes cast at general meeting. “Material” shall be taken to mean, although not exclusively, “changes which significantly alter the asset type, credit quality, borrowing or leverage limits or risk profile of the QIAIF”.

In the event of a change of investment objectives and/or investment policy, on the basis of a majority of votes cast at a general meeting, a reasonable notification period must be

provided by the QIAIF to enable investors redeem their shares/units prior to implementation of these changes.

10.6.7 Related Party Dealings

The Central Bank has set out specific rules for transactions carried out with a QIAIF by a general partner, manager, depositary, AIFM, investment manager and/or its delegate or associated or group companies. The general principle is that any such transaction has to be carried out as if effected on normal commercial terms, negotiated at arm’s length and must be in the best interests of the investors. There are specific limitations imposed around such transactions.

10.6.8 Conflicts of Interest

The QIAIF’s prospectus must include a description of the potential conflicts of interest which could arise between the AIFM, management company, general partner and investment manager and the QIAIF, for example, directed brokerage services and/or the receipt of commissions by virtue of an investment in the units of another investment fund with details, where applicable, of how these are going to be resolved. A description of soft commission arrangements which may be entered into by a QIAIF must also be included.

The QIAIF shall only enter into a transaction with, as appropriate, its general partner, management company, depositary, AIFM, investment manager and/or its delegate or associated or group companies, where there has been full disclosure in the QIAIF’s prospectus.

10.6.9 Board Appointments

Board appointments to QIAIFs and to QIAIF management companies require prior Central Bank approval. This requires completion of an online questionnaire. Departures from the

Dillon Eustace | 152 board of directors must be notified to the Central Bank immediately. Two directors must be Irish resident and there is a prohibition on common directors between the QIAIF (or its management company) and the board of directors of the depositary.

In all cases where a director wishes to resign and prior to completing the relevant Central Bank form, the Board or its Chair must form a view as to the impact of the resignation on the AIF Management Company having regard to the current and prospective financial state of the AIF Management Company and the AIFs under management. In the event that the Board or, in the absence of a Board meeting, the Chair forms the view that the situation is one which could create such concern on the part of the Central Bank, it shall state this on the relevant Central Bank form. The Board or its Chair may consult the Central Bank in order to help it form a view on that matter.

In addition to the Central Bank pre-approval requirement, directors are also subject to obligations under the Irish fitness and probity regime.

10.6.10 IFIA Corporate Governance Code

Although voluntary, there is an expectation on the part of the Central Bank that QIAIF’s will adopt the Irish Fund Industry Association’s (IFIA) Corporate Governance Code (the “Code”). The Code applies to the boards of investment companies and to the Boards of management companies/general partners of unit trusts, CCFs and investment limited partnerships. 10.6.11 Suspensions

Where a QIAIF temporarily suspends the calculation of its NAV and the redemption of shares/units, the Central Bank must be notified immediately, in any event within the working day on which the suspension took effect.

10.6.12 Financial Reporting

A QIAIF is required to publish an annual report for each financial year which must be submitted to the Central Bank within 6 months of the end of the financial year. The accounting information contained within the annual report must be audited and the full auditor’s report to investors, including any qualifications, must be reproduced in the annual report.

The annual audited financial statements must comprise a balance sheet, income statement, a portfolio statement and statement of changes in the composition of the portfolio during the period and any significant information which will enable investors to make an informed judgement on the development of the QIAIF and its results. The annual report must also

contain a report on activities during the financial year including an overview of the investment activities during the period and material changes in information disclosures. The annual financial statement must be audited by one or more persons empowered to audit accounts in accordance with the Irish Companies Acts and the auditor’s report to

shareholders, including any qualifications, must be reproduced in full in the annual financials. The QIAIF shall prepare and submit to the Central Bank a set of accounts (whether an interim report or an annual report) within 12 months of the launch date and publish it within 2 months if an interim report or 6 months if an annual report. The first annual reports must be within 18 months of incorporation/establishment and published within 6 months.

The QIAIF shall, on request, supply investors with copies of the annual reports free of charge.

Where the QIAIF is an umbrella QIAIF constituted as a unit trust or common contractual fund, it may produce separate periodic reports for individual sub-funds. In such cases, the report of each sub-fund must name the other sub-funds and state that the reports of such sub-fund are available free of charge on request from the management company.

In accordance with company law, an investment company established as an umbrella QIAIF must include accounts for all sub-funds of that company in its periodic reports.

10.6.13 Other Reporting

QIAIF’s must also submit a monthly return to the Statistics Division of the Central Bank, within 10 working days of the month-end to which it refers, setting out its total gross and net asset value, number of shares in issue, net asset value per share, subscription and

redemptions during the month and net subscription/redemption receipts. This is normally dealt with by the Administrator.

An AIFM will also be required to report on a regular basis to the Central Bank on the principal markets and instruments traded by it on behalf of the QIAIF. The AIFM will also separately be required to report regularly on liquidity arrangements and risk management systems of the QIAIF.

An investment manager must also file a copy of its audited financial statements with the Central Bank annually.

10.6.14 Warehousing

A QIAIF may only acquire assets pursuant to a warehousing arrangement where the use of such arrangements is fully disclosed in the prospectus, including details of any fee payable

Dillon Eustace | 154 in relation to such arrangements. The prospectus must also state that the QIAIF will pay no more than current market value for such assets.

10.6.15 Subsidiary disclosure

A QIAIF intending to invest through wholly-owned subsidiaries must disclose that ability in the prospectus and state that the names of any subsidiaries will be disclosed in the QIAIF’s annual report.

10.6.16 Breaches of Investment Restrictions

The limits on investments set down in a QIAIF’s prospectus are deemed to apply at the time of purchase of the investments. If the limits laid down are subsequently exceeded for reasons beyond the control of a QIAIF or as a result of the exercise of subscription rights, the QIAIF must adopt as a priority objective the remedying of that situation, taking due account of the interest of its unitholders.

10.6.17 Regulatory Levies

The Central Bank imposes an annual industry funding levy on collective investment schemes. Rates (at time of writing) include an annual fee of EUR 2,000 whether an umbrella or a single structure fund. Umbrella funds also pay a contribution of EUR 450 per sub-fund on the first five sub-funds resulting in a maximum contribution for umbrella funds of EUR 4,250.